Guidelines for Guardians
Congratulations on your appointment as Guardian of a person determined to be incapacitated under the Mental Hygiene Law. This booklet is intended to guide you through your duties and is a written embodiment of the information you have obtained or will obtain in the Guardianship course that you must complete. However, this booklet is not intended to answer every question that you may have concerning your duties. Your Attorney and the Court Examiner are the individuals who can answer specific questions as they might arise in your particular situation.
II. QUALIFYING AS A GUARDIAN
A. After the Hearing
This booklet assumes that a hearing has been held and that the judge has issued a decision declaring the Alleged Incapacitated Person to be incapacitated and designating you as Guardian. You may be the Guardian of the Person, meaning you have the authority to make personal decisions on behalf of the Incapacitated Person, and/or you may be the Guardian of the Property, meaning that you have the authority to manage the finances of the Incapacitated Person. After the hearing, your attorney will prepare an Order and Judgment appointing you as Guardian. S/he will submit this Order to the Court and will also send a copy to all persons who appeared at the hearing. The Judge then will sign the Order after it has been reviewed by all parties. In many counties, prior to the Judge’s signing the Order, the transcript of the hearing must be secured, and all parties must have at least 10 days’ notice. In those counties it may take a month or so after the hearing to receive a signed Order. Your attorney will send you a copy of this Order. This Order sets forth your powers, as explained more fully below. It does not, however, authorize you to act as Guardian. To act as a Guardian, you must receive a Commission to Guardian. The Commission is issued when you have signed a Consent and a Designation and filed it with the County Clerk and, for most Guardians of the Property, when you have filed a Bond with the Clerk as well.
B. Consent and Designation
A Consent to Act states that you agree to act as the Guardian of the Incapacitated Person. Although you have most likely already declared in court that you wish to act, you must sign this statement before a Notary Public, confirming your intent to act. A Designation states that you will faithfully discharge your duties as Guardian. Moreover, if any issue arises concerning your duties such that you must be served legal papers and if you cannot be found, you agree that the County Clerk may be served these papers instead of you. That means that if you are no longer in the jurisdiction of New York, for the purposes of any action concerning your role as Guardian, legal action can continue as if you were in New York.
If you have been appointed as a Guardian of the Property, the Order and Judgment appointing you has fixed an amount of a Surety Bond to be issued, insuring the Incapacitated Person’s funds from misuse. Prior to issuing a bond, the surety company may want you to complete an application form in which you list your assets and liabilities so that the company can assess whether or not to issue this bond. Once the bond has been issued, you must sign it before a Notary Public and then submit this bond either for approval by the judge who appointed you or directly for filing with the County Clerk of the county in which the proceeding took place. If you do not qualify for a bond, the Court may devise an alternative such as appointment of an attorney as co-guardian.
The Commission is issued by the County Clerk and states that you have qualified to serve as Guardian by reason of having filed your Consent and Designation and Bond. This Commission will, in many instances, list your duties and powers as delineated in the Order and Judgmentappointing you as Guardian. The Commission is signed by the County Clerk and authorizes you to gather all the assets of the Incapacitated Person. If you are a Guardian of the Property, by presenting this Commission, all persons having assets of the Incapacitated Person must deliver these assets to you. If you are Guardian of the Person, by showing this Commission, you may make decisions concerning the personal needs of the Incapacitated Person within the parameters of the powers granted in the Order and Judgment. As the Incapacitated Person may have assets in several different financial institutions, you may wish to obtain several Commissions certified by the County Clerk to be true copies of the original. In some counties, the Commission is a one page document that is annexed to the Order and Judgment which delineates your duties and authority as Guardian.
III. THE FIRST NINETY DAYS
A. Training Course
All persons appointed Guardians are required to attend a training course for Guardians approved by the Office of Court Administration unless this course has been waived pursuant to the Order and Judgment appointing you. Such courses are offered on a rotating basis by the local bar associations in the county in and near which you reside and by other organizations, such as law schools or providers of legal seminars approved to offer such courses. By law, you are required to attend this training course within 90 days of the date of your Commission. You will receive a Certificate of Attendance stating that you have attended this Guardianship class. This Certificate is an important document and should be retained with the other documents concerning this Guardianship, such as the Order and Judgment and a certified copy of the Commission. In a few counties a compliance conference is held a few months after the Guardianship hearing to insure that the training course has been completed and the Oath, Consent and Designation and Bond have been filed. The conference is sometimes waived if all of this material is submitted prior to the conference date.
B. Marshal Assets
1. Title of Accounts
a. Guardianship Assets
As a Guardian, you must gather all of the assets of the Incapacitated Person and establish accounts titled: “YOUR NAME as Guardian of _____ an Incapacitated Person.” As you are not the owner of these accounts, the Social Security number of the Incapacitated Person will be used in establishing these accounts. Prior to your appointment, the Petition seeking the appointment of a Guardian will have listed the assets of the Incapacitated Person. The Court Evaluator will have investigated to ascertain that the assets listed in the Petition are all of the assets that belong to the Incapacitated Person. You must keep the Incapacitated Person’s funds separate from yours and never commingle, or place your own assets into the Incapacitated person’s account, or place the Incapacitated Person’s assets into your own personal accounts.
b. Supplemental Needs Trust Assets
The Order and Judgment may have authorized you, as Guardian, to establish a trust fund for the benefit of the Incapacitated Person so that s/he may continue to receive government benefits such as Supplemental Security Income (SSI) and Medicaid, without having his/her own assets disqualify him/her from eligibility. If so, and if you are the Trustee of this trust, then you should gather all of the assets of the Incapacitated Person and establish accounts titled: “YOUR NAME as Trustee of the Supplemental Needs Trust for _______ an Incapacitated Person.” This trust will have its own Tax Identification Number issued by the Internal Revenue Service. Use this number, rather than the Incapacitated Person’s own Social Security Number, in opening these accounts. This number will be used in filing income tax returns for the trust. If your attorney has not already obtained this number for you, then you may request a form, called an SS4, from the Internal Revenue Service. It will then issue the identification number to you. If there is a structured settlement, or future periodic payments, the Commission and the Order and Judgment should direct that the insurance company make future payments to you as the Trustee of the Supplemental Needs Trust Fund. Either you or your attorney must present that Order and the Commission to the insurance company that owns the annuity to arrange for proper payments. This information may be contained in a Court Order authorizing a lawsuit recovery for the Incapacitated Person.
2. Types of Accounts
a. Checking Account
It is important for you to open a checking account in your name as Guardian of _________ an Incapacitated Person, so that you may make the expenditures authorized in the Order and Judgment and/or which are reasonable and necessary to provide for his/her needs. By making all expenditures by check, you will have proper and accurate records for the reports described below.
b. Securities, Annuities, Insurance Policies
Securities, likewise, will be titled in your name as Guardian of ________ an Incapacitated Person. When stocks and bonds are held by a brokerage company or investment house or other financial institution, the brokerage statement will be issued monthly or quarterly. You must verify that the account statements are correct, and must retain these monthly or quarterly statements in preparation for your initial and annual reports.
c. Certificates of Deposit/Savings Accounts
If you wish to retain these accounts, once again you must change the title of these accounts to Your Name as Guardian of an Incapacitated Person. Even if a Certificate of Deposit has not yet come due, you must change the title. When done pursuant to a court order, New York Banking Law §§ 9-I(2) and 238 preclude a bank from charging a penalty to this transaction.
3. Examining Transactions Occurring Prior to Your Appointment
When marshaling the above assets, you must verify that any recent use of the funds was authorized. If you believe that the Incapacitated Person unknowingly transferred assets or that anyone acting on behalf of the Incapacitated Person made unauthorized use of his/her funds, you may demand their return. The Order and Judgment appointing you Guardian may have highlighted some unauthorized transactions and hence may give you a clear mandate to gather particular assets no longer belonging to the Incapacitated Person or to pursue a procedure to have them found and returned.
4. Personal Property
Personal property must be inventoried. If this property is unattended, such as in a vacant home of the Incapacitated Person, you should secure it. Valuables should be appraised.
5. Joint Accounts
When assets have been jointly held between the Incapacitated Person and another, the Order and Judgment most likely determined what percentage was owned by the Incapacitated Person and what percentage belongs to the other individual. For example, assets may have another’s name for convenience only, and they really belong to the Incapacitated Person. Those assets belonging to the Incapacitated Person are those that you will marshal in accounts titled: Your Name as Guardian of _________ an Incapacitated Person.
6. Last Will and Testament
If the Incapacitated Person has executed a Last Will and Testament, you must locate the original Will. In some counties the Will must be filed with the Surrogate’s Court in the county in which the Incapacitated Person resides, while in other counties the original Will is kept with the attorney who drafted the Will. If you file the Will with the Surrogate’s Court, you will get a receipt for this filing, which you should retain along with your other documents.
C. Real Property
1. Real Property Filing
If the Incapacitated Person owns an interest in real property, you must file a form with the County Clerk in the county in which the property is located, identifying that an Incapacitated Person owns an interest in this property. In this manner, the real property is protected and cannot be conveyed without the approval of the Court. This form is filed with the section, lot and block of the property and is signed by you before a Notary Public.
Securing a written appraisal of real property owned by the Incapacitated Person assists you in determining whether retaining this real property is in the best interest of the Incapacitated Person.
You must ascertain that all insurance premiums have been paid. If there has been a lapse in fire and theft coverage, this must be reinstated or new insurance purchased.
D. Inventory Safe Deposit Box
A safe deposit box must be opened in the presence of a bank officer and a representative of the surety unless it is waived in writing. The contents must be inventoried. This list should be filed with the Court. The contents of the safe deposit box should be secured and included in your Initial Report.
E. Assess Needs
The Order and Judgment sets forth a plan that you will undertake in the best interest of the Incapacitated Person. If the Guardian for Personal Needs is different from the Guardian for Property Management, the two Guardians must coordinate efforts to effectuate the proposed plan for the Incapacitated Person. The Guardian for Personal Needs must determine if there are any unmet medical, personal care, or housing needs. If the Incapacitated Person has been living alone, you may need to arrange home care services for him/her. You must assure that sufficient care is provided for the needs of the Incapacitated Person. You may also have the authority to choose the place of abode. Assisted living facilities or even entry to a skilled nursing facility as alternatives to living alone may be sought if appropriate and if authorized in the Order and Judgment.
F. Court Examiner
The court will appoint a Court Examiner who will examine your initial and annual reports. This person is different from the Court Evaluator who was present at the hearing that determined that the Incapacitated Person was in need of a Guardian and that you would be suitable to serve. The name, address and telephone number of the Court Examiner will be included in the Order and Judgment. You should forward to him/her a copy of your Consent and Designation, Bond, and Commission and, if applicable, Supplemental Needs Trust.
G. Initial Report
An initial report is due 90 days after the issuance to you of your commission as Guardian. You should send the original initial report to the Court, and a copy to the Court Examiner. You must include the following:
1. a copy of the Certificate of Attendance stating that you have attended a Guardianship class as part of this initial report. If you have not been able to attend such a class, you must explain why and what plans you have made to enroll in the class.
2. a list of all the assets of the Incapacitated Person and proof that they are now titled in your name, as Guardian of _______ an Incapacitated Person.
3. an explanation as to why any assets have not yet been titled in your name as Guardian.
4. a copy of the Real Property filing with the County Clerk for any real property owned by the Incapacitated Person.
5. a medical report on his/her mental and physical condition, together with a statement of medications and treatments.
6. expenditures you have made on behalf of the Incapacitated Person. These are called disbursements.
7. a receipt showing that you have filed the Last Will and Testament with the Surrogate’s Court, if applicable.
H. Investment of Assets
Pursuant to the prudent investor standard, the Guardian should invest and reinvest the funds according to Estates Powers & Trusts Law § 11- 2.3. You have a duty to maximize returns but not risk loss on the overall investments. For accounts retained in banks, you must be careful not to retain more than $250,000 in any single bank, as the accounts may not otherwise be insured by FDIC.
IV. POWERS OF THE GUARDIAN FOR PROPERTY MANAGEMENT AND PERSONAL NEEDS
Article 81 of the Mental Hygiene Law affords incapacitated persons the opportunity for their previous wishes to be honored and, in the absence of a prior expression of their desires, the wishes of a reasonable person in their circumstance are applied to the incapacitated person’s situation. Because the law leaves as much discretion and autonomy with the Incapacitated Person as possible, you have only those powers authorized by the court. In providing for the property management and personal needs of an Incapacitated Person, you must exercise your judgment within the parameters of the court order to provide for the best interests of the Incapacitated Person.
B. Powers of the Guardian for Property Management
1. Marshaling Assets and Establishing an Accurate Inventory
2. Developing a Budget for the Needs of the Incapacitated Person and, When Applicable, for Dependents of the Incapacitated Person
The Petition to Appoint Guardian and Order and Judgment may have already approved expenditures to be made from the funds of the Incapacitated Person. All expenditures must be for the benefit of the Incapacitated Person, directly or indirectly. In many counties, any large expenditures not previously authorized should receive prior approval either of the Court or of the Court Examiner. The individual courts differ on what constitutes a large expenditure for which specific approval is sought. In certain counties, individual expenditures above $1,000 should have specific approval if not included in a budget or in the type of expenditures for which you are given discretion to make as Guardian. In Queens County, for example, a Guardian may present a short form Order to the Court Examiner assigned to the case in which the Guardian will detail the expenditures sought. The Court Examiner will then review the proposed expenditure and make a recommendation to the Court, which will then either approve or disapprove the expenditures or call for additional information concerning the need for the expenditures. In some counties a letter written to the Court Examiner will suffice, while other counties do not require court oversight and prior approval for large expenditures. If you were represented by an attorney in the Guardianship proceeding, your counsel can advise you as to the ongoing reporting responsibilities. Keeping in mind that the Court’s primary concern is preserving the assets of an Incapacitated Person for his/her own needs, you should review previous patterns of spending made by the Incapacitated Person when the Incapacitated Person was using his/her own judgment. In preparing a budget, you must assess the needs of the Incapacitated Person, the assets available to provide for the needs, and the desires expressed by the Incapacitated Person. Any previous pattern of gifting may also be continued, subject to the Court’s prior approval. In assessing whether or not to gift assets, the tax and government entitlement consequences of the proposed gifting must be analyzed and presented to the Court for the Court’s consideration. Absent Court approval, you may not use the assets of the Incapacitated Person for anyone other than the Incapacitated Person. With the Court’s approval, the Guardian may provide for the support of those dependent upon the Incapacitated Person, even if the Incapacitated Person is not legally liable for the support of those dependents.
3. Determining Eligibility for Government and Private Benefits
As a Guardian, you are a Fiduciary. As a fiduciary, you have a duty to act in the best interest of the Incapacitated Person and not to benefit personally from the decisions that you make for his/her benefit. Consistent with your fiduciary duty to preserve assets of the Incapacitated Person and consistent with your
authority to qualify the Incapacitated Person for government and private benefits, you may examine the situation of the Incapacitated Person to determine whether or not s/he is entitled to receive either private
benefits or government benefits. The following is a brief overview of the government entitlements and private
benefits for which an Incapacitated Person may be eligible and the requirements for those entitlements.
a. Private Benefits